Based in Greensboro, North Carolina,
V. F. Corporation
) - one of the world's largest apparel companies - is scheduled
to release its third-quarter 2012 financial results on Monday,
October 22, 2012. The current Zacks Consensus Estimate for the
quarter stands at $3.49 per share, an increase of 21.5% from
earnings of $2.87 reported in the year-ago quarter.
We believe that the higher earnings expectations are due to
the company's aggressive approach toward the expansion of its
international business, particularly in the Asia Pacific and
European regions. Moreover, V.F Corp.'s policy to acquire
businesses that provide strategic opportunities and exiting
businesses having lower potential has helped it drive growth and
With respect to earnings surprises, V. F. Corp has topped the
Zacks Consensus Estimate over the last four quarters in the range
of 0.87% - 18.09%, with an average of 8.68%.
For fiscal 2012, the Zacks Consensus Estimate stands at $9.53
per share, which is higher than the earnings of $8.04 in
Second-Quarter 2012 Recap
V.F. Corp. reported second-quarter 2012 adjusted earnings of
$1.11 per share, speeding ahead of the Zacks Consensus Estimate
of 94 cents. However, the result dipped 5% from adjusted earnings
of $1.17 per share earned in the comparable prior-year
The year-over-year decline was mainly due to a loss of 12
cents at the Timberland operations as well as a combined 11 cents
per share impact from foreign currency translation and higher
V.F. Corp.'s second-quarter revenue of $2,141.8 million fell
short of the Zacks Consensus Estimate of $2,173 million. Revenues
grew 16% compared with the year-ago period, on the back of robust
growth in Outdoor & Action Sports and international
Given the solid second-quarter results, the company raised its
earnings forecast for fiscal 2012 by 5 cents per share to $9.50
per share, while it had earlier forecasted earnings of $9.45 per
share. However, the company retained the expected earnings
contribution from Timberland at $1.10 per share.
(For full report on earnings study:
V.F. Corp's 2Q Beats, Rev Misses
Agreement of Estimate Revisions
For the to-be-reported quarter, 2 out of 18 analysts raised
their earnings estimates while only one lowered over the past 30
days. During the last 7 days earnings estimates have remained
almost unchanged with only one analyst lowering estimate for the
Moreover, for fiscal 2012, over the last 30 days, only one
estimate has been revised in the upward direction while one
estimate was adjusted in the opposite direction. A similar trend
was also seen in the past 7 days.
Magnitude of Estimate Revisions
Due to more positive estimate revisions during the last 30
days, the consensus estimate for the third quarter has been
increased by a penny to $3.49 per share. Further, for fiscal
2012, the consensus estimates have been moved up by a penny to
$9.53 per share, over the last 7 days.
V. F. Corp Stays Neutral
We remain impressed with the company's consistent positive
earnings surprise trend, strong organic revenue growth, as well
as the raised management guidance. However, stiff competition
from private label brands and currency fluctuation still remain
the causes of concern, thus keeping us on the sidelines.
As one of the world's largest apparel companies with over 30
brands, V. F. Corp is well positioned to generate above-average
industry growth and sustain itself in the current challenging
However, skepticism still remains since the company derives
about 34% of its sales from international business, which exposes
it to risks of foreign laws and regulations that could negatively
affect operations, foreign consumer preferences, disruptions or
delays in shipments and currency fluctuations.
V. F. Corp, which faces stiff competition from well
established apparel industry players like
Polo Ralph Lauren Corp.
Sears Holdings Corp.
The Gap Inc.
), carries a Zacks #2 Rank, implying a short-term Buy rating.
However, we retain our long-term Neutral recommendation on the
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